What has happened in the two years since Royal Caribbean International admitted polluting Alaska waters has been a sea change for the industry.

The Alaska Cruise Ship Initiative, set up by state Environmental Conservation Commissioner Michele Brown on Dec. 3, 1999, has been called a groundbreaking collaboration among industry, regulators and citizen activists. Although environmentalists say it didn't go far enough, the wastewater testing done by the initiative last year yielded the best information on the content of those discharges that ever has been collected, according to officials of the U.S. Environmental Protection Agency.

In the wake of the high fecal-coliform counts, Congress passed special protections for Alaska waters last December. The cruise industry reportedly has been spending millions of dollars on experimental technologies to clean up both blackwater, or toilet waste, and graywater, which comes from sinks, showers, galleys and laundries.

"What we feel has happened is, since the commissioner first called this group together on Dec. 3, well over a year ago, that there has been a paradigm shift in how things are addressed and how people view cruise ships, and what they know and understand about cruise ships," said Dean Brown, vice president of Princess Cruises and chairman of the North West CruiseShip Association. "And I think the cruise industry knows more about what's happening than they did many months ago. ... I think where we are is, we have found and identified issues, and management practices to address those."

Although cruise executives say they were working on improving environmental performance before the intense scrutiny of the past couple of years, they concede that Alaska to a large extent is driving the change. News in Alaska travels worldwide, they say, and Alaska environmentalists have been successful in enlisting national groups to increase pressure on the industry.

Forthcoming changes in technology made in response to that pressure will have international ramifications.

"You can't retrofit a ship with hardware that won't be with the ship when the ship leaves Alaska," noted a cruise executive, who spoke on the condition of anonymity. "All of this conflict and controversy and scrutiny certainly have propelled the industry and suppliers of the industry to push the envelope on technology more rapidly than if there had been no outside pressure. ... What was OK three years ago is not OK anymore."

Gov. Tony Knowles wants state environmental regulations to complement and perhaps exceed the federal ones. But the EPA also is considering more extensive federal regulations than were included in the bill passed by Congress.

The industry has agreed to ongoing monitoring but there have been disagreements at times about the scope of testing. New wastewater-cleaning technology is being touted but retrofitting all the ships will take two to three years.

A new financial regime is possible, also. Juneau has enacted a passenger head tax, and other communities have considered it, as have some legislators.

However it all comes out, everyone involved agrees it's a new era.

The sleeper issue awakens

Gershon Cohen of Haines had been active in water-quality issues for years. But the cruise ship pollution issue caught him by surprise.

"When we became aware in Haines of the Royal Caribbean felony convictions and found out what they had done in the waters off of Haines, we were shocked and we woke up," Cohen said. In following up, "We found out they had no permits to discharge. There was nobody at the helm. ... That was wake-up call No. 2."

In the early 1970s, during EPA's infancy, no one considered cruise ships a threat to the environment. There was much more concern with land-based "point sources," such as factories. As a result, cruise ships are not included in the Clean Water Act's pollution discharge permitting program.

"Basically a pecking order was established and we addressed the worst polluters first," said Steve Torok, a Juneau-based EPA official. "No one paid attention to this industry."

As the industry grew and ships got larger, the general lack of oversight continued. The Coast Guard was responsible for making sure the oil-water separators and Marine Sanitation Devices for blackwater were installed and functioning, but there were no federal guidelines for fecal coliform in graywater discharges, for example. With most large ships operating under foreign flags and international maritime standards, there also was some question about the jurisdiction of American regulators.

"This is an industry that has grown up under its own rules," said state Rep. Beth Kerttula, a Juneau Democrat. "We're dealing with laws from the 1800s."

Michele Brown said she wondered every year about the increasingly large ships, which she could see from her DEC office in Juneau.

"Three years ago, we didn't know a thing," Brown said. "We, as an agency, were just assuming someone else was taking care of it."

Once the news about Royal Caribbean hit, she said, "In my mind, it was just unacceptable to not know anymore."

In July 1999, Royal Caribbean pled guilty to 21 felony violations of federal law, including seven in Alaska, and agreed to pay a fine of $18 million, $6.5 million attributable to incidents here in 1994-95. Among its misdeeds, the company routinely dumped waste oil into the Inside Passage at night and falsified records to cover it up. Ships also dumped photo processing and dry cleaning chemicals into Gastineau Channel.

The state sued Royal Caribbean over the same incidents and received a $3.5 million settlement.

Earlier, in a separate federal case, Holland America was fined $1 million and ordered to pay $1 million in restitution for discharging waste oil in Glacier Bay and Icy Strait in 1994.

Apologies, bluster and cooperation

The atmosphere after the Royal Caribbean guilty plea was volatile, sometimes turning Alaskans against each other.

Company President Jack Williams came to Southeast to apologize and to insist that new management and new philosophies were in place. But Haines environmentalists who used a parade float to mock the company got pelted with tomatoes by a businessman dependent upon the cruise ship traffic. Cohen's teen-age daughter was struck in the face, resulting in criminal prosecution and a conviction.

Cruise lines made investments in local communities. But local tour operators were expected to support the cruise industry publicly, according to one operator who was dumped by a cruise line after making critical comments in a newspaper article.

A head tax initiative in Juneau sparked talk of lawsuits and lost revenue if the ships pulled out. After the $5-per-passenger fee was passed by voters, Princess announced shorter port hours in Juneau for 2000 and Holland America suggested it would sharply curtail its charitable giving in Juneau, although ultimately it didn't.

Those hard-ball tactics have been common in the Caribbean, says Michael Driscoll, editor of Cruise Week, a Wilmington, N.C.-based newsletter on the industry. But the strategy has changed in Alaska, he said. "I think they've gotten a lot better. They need Alaska."

At the end of 1999, industry executives agreed to participate in the Alaska Cruise Ship Initiative, a new voluntary approach toward resolving environmental questions.

"We just wanted to do it very collaboratively," said Brown of DEC. "We wanted to develop the facts in a way that nobody would fight over the facts."

The group, which includes federal regulators and citizen activists, set out to determine what the ships were releasing into the water and emitting into the air, and what new environmental-protection measures could be put into place. The industry agreed to pick up the costs of monitoring and testing.

As it turned out, nobody really expected what they found.

Fecal coliform happens

For years, Juneau residents had been complaining about smokestack emissions from the cruise ships.

A state monitoring program begun last year is financed by the Royal Caribbean settlement. And there was independent federal oversight in 1999-2000. Between those efforts, there were nearly three dozen alleged violations of the air opacity standard, which regulates how much of the background can be obscured by smoke.

Federal officials have dropped some of their complaints and proposed fines, and some fines have been paid. The state Department of Law has not yet acted on the alleged violations referred there. But ambient air testing paid for by the industry in downtown Juneau found that pollution from all sources was well below the maximum levels in federal law.

More extensive testing this summer will include the dry part of the season.

Princess ships will plug into shoreside power for the first time. And a couple of ships with cleaner-burning gas turbines are on the schedule for Alaska.

But water quality has been another story.

Testing didn't turn up any mixing of hazardous wastes with the marine discharges, originally a source of concern.

But fecal coliform, an indicator organism for the presence of human or animal waste, was found in quantities well above federal and state standards for sewage treatment, sometimes by a factor of tens of thousands.

In an anomaly that still hasn't been explained conclusively, graywater often had higher counts than blackwater. Cruise lines suggested that holding graywater for discharge well away from ports allowed exponential bacteria growth.

The Coast Guard found the Marine Sanitation Devices were often not functioning properly on the ships. Knowles called the discharges "disgraceful" and summoned cruise line executives to his office in November to get a commitment for better environmental performance.

"With the exception of one company, they said they didn't know they weren't performing up to speed," Knowles said in a recent interview. "So they pled ignorance. That emphasized to me the particular need of having a system of monitoring and enforcement that didn't allow something that important to slip through the cracks."

The test results breathed new life into a cruise ship bill offered in Congress by Alaska Sen. Frank Murkowski. Originally intended only to close some loopholes in the ban on dumping untreated sewage, the bill was expanded in scope to include restrictions on the discharge of graywater and treated blackwater. Negotiations over the bill included Knowles, the industry and environmentalists, and a consensus was reached. The bill, signed into law by President Clinton in December, constitutes "the world's most stringent standards," say recent industry advertisements.

Cruise executives say they are committed to cleaning up the discharges, although they contend that studies they've paid for show that the dispersion created by a moving ship dilutes the bacteria to undetectable levels within short distances.

Joe Geldhof of Juneau, co-author of the local head tax, said that the industry is trying to improve its environmental performance but it's not happening at a pace that's calming the public. "The expectations are going up faster than they can (retrofit), for which they have my mild sympathy."

The beat goes on

Throughout the turmoil, the cruise ship sector in Southeast has continued to grow.

In fact, the growth has exceeded expectations. A state estimate in June 1997, before the environmental controversies took off, was that the industry would grow to 632,000 passengers in 2002. It reached that level last year.

This year, 683,000 cruise ship passengers are expected in Juneau, a near tripling of the local industry since 1990, when 235,000 passengers arrived.

The importance of that growth in tourism - during an era of regional declines in mining, government, timber and fishing - led to the formation of a local support group, Destination Juneau. Along with an energized Juneau Chamber of Commerce, those business owners successfully argued against a ballot initiative last fall to limit flightseeing operations serving cruise passengers.

Helping make the case for the tourism industry is an October report by The McDowell Group, a local research consulting business, which estimated cruise lines, passengers and crew spent $90 million in Juneau in 1999.

"Juneau not only sees the highest number of cruise visitors in Alaska; it also has considerably more tour activity than any other destination in the state," the report said.

But despite this impact on the economy, any threat to leave Alaska because of head taxes or environmental regulation just wouldn't be credible, said Driscoll, the industry newsletter editor. Recent industry statistics show that the companies do 15 to 20 percent of their annual worldwide business in Alaska, even though it's a short season here, he said. "There's no way they can walk away from Alaska. They could walk away from small ports because your typical consumer has never heard of Haines, Alaska."

Princess canceled its one annual docking in Haines last year and Royal Caribbean has dropped its much more substantial schedule there, as well, beginning this year. Critics of the environmental community there say both actions were punitive responses to local complaints about industrial scale tourism.

In Juneau, though, the cruise industry stresses its investment - about $1 million in charitable contributions in Southeast last year, $1.3 million in oil spill response equipment donated to local communities, and up to $196,000 on air-quality monitoring downtown this year.

Companies are also talking whenever they can about experimental new technology for treatment of wastewater - such as "reverse osmosis," which forces water through a semi-permeable membrane, and "ultra filtration," another process touted as reducing the use of hazardous chemicals.

"I'm pretty comfortable with the idea in a number of years the technology will bring us to a pretty clean discharge," said Brown of DEC. But there is still the need for verification through monitoring, she said.

New rules, taxes, laws?

Now the question is whether the regulatory change that has occurred so far is deemed sufficient.

Once a Marine Sanitation Device became a standard feature on cruise ships in the 1970s, "No one paid any attention to whether it worked, whether it was operated correctly, whether it met any kind of standard anybody thought was reasonable - nothing. Everybody went to sleep," Brown said. Now with the fecal coliform problem, "The industry goes, 'Oh, OK, well, we'll fix it, we'll put more technology on.' ... We're basically being asked to recreate a negative history."

Relying on the federal government isn't enough, she said. "Priorities change. Budgets change. You know, things happen. We will have a program in place to pick up after them."

"There's no reason for the public to depend upon the good will of this industry to ensure there will no longer be abuses," said Cohen, the Haines environmentalist. "They still should have to prove it on a regular basis, like everybody else does it."

Cruise line executives have refused to discuss Knowles' bill to set up a permit program for cruise ships, which would be financed by $1 per passenger fee. After holding out for three months, they have now agreed to a pollution reporting system advocated by Rep. Kerttula. The bill, revised by the House Transportation Committee on Thursday, also would require the industry to meet a fecal coliform standard for graywater by 2003.

A statewide head tax of $50, approved by the Senate last year, is also waiting in the wings. Sen. Drue Pearce, an Anchorage Republican, said the statewide tax would end the situation under which cruise lines, by threatening to skip ports with head taxes, "play communities off against each other."

Meanwhile, a proposed citizen ballot initiative would impose a $50 head tax, take a third of on-board gambling proceeds and bring cruise ships under the state corporate income tax. It was filed with the Division of Elections on Thursday.

"It should make us seem like we're moderates," Knowles said of the ballot initiative. But the industry is getting behind the revised Kerttula bill, in what some view as an attempt to make the governor's bill appear excessive.

With tension between Knowles and the industry, most cruise executives have declined comment on the governor's bill - for fear of inflaming the situation, said one.

"We're at the table," Dean Brown of Princess said at the April 6 meeting of the Alaska Cruise Ship Initiative steering committee. "We'll continue to participate as this process goes on."

Kerttula said the day will come when cruise ships report their pollution, operate under state permits and regulations, and pay state fees or taxes. "It's going to happen. It's just a matter of time. ... I think it can be an excellent, clean, really vibrant industry for Alaska."

Knowles is emphatic: "We're going to have regulations in place for next season."